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Healthcare

Essay by   •  February 18, 2011  •  Essay  •  2,607 Words (11 Pages)  •  1,153 Views

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EXECUTIVE SUMMARY

RECOMMENDATION

We recommend that DragonCare Ltd expand its footprint to Canada through a fully owned subsidiary by the name of “DragonCare Canada Ltd”.

Awareness of alternative health medicine is increasing rapidly in Canada. The Canadian Natural Health Products (NHP) industry (Market Size: $2620 million) , of which the herbal medicines have a 40% share (Market Size: $1048 million), is growing at 20% annually .

The Traditional Chinese Medicine (TCM) segment in particular is highly fragmented with no major brand in the marketplace. Market share of none of the current players exceeds 5%. In this respect, the market condition in Canada is similar to what exists in DragonCare’s current markets and provides DragonCare a good opportunity to create a niche for itself by building a brand on the strength of its scientific research capabilities and experience of operating in such markets.

ROLL OUT STRATEGY

DragonCare Canada should employ a phased approach in introducing its products, its geographic expansion in Canada and introduction of its full value proposition to the Canadian customers.

DragonCare should enter Canada with two patented women’s healthcare products preferably for nutritional benefits & immunity development which have the highest demand in Canada . The strategy is to develop these products as DragonCare’s “Flagship” products in Canada. Introduction of other products will be after the “DragonCare Brand” is established. Further, DragonCare should initially limit itself to British Columbia and Alberta since these are the biggest markets for TCM products (51% of people in BC & Alberta use NHPs & TCM) . BC also has a high Chinese immigrant population (380,000 Chinese immigrants i.e. 31% of Chinese immigrants in Canada are in Vancouver, BC) , thereby providing an attractive easy-to-tap market for DragonCare. After 3 years of operations in Canada, DragonCare should introduce services in the form of TCM clinics, thereby completing its value proposition.

Dragoncare, with its limited resources should focus on growing primarily in the Canadian market. However, if a few years down the road, DragonCare decides to enter the US market, it should consider setting up a manufacturing unit in Canada to take advantage of the North American Free Trade Agreement and use Canada as a manufacturing base for North America. However, we do not recommend setting up a manufacturing unit in Canada to target the Canadian market because of higher risk associated with high initial investment and also because the production costs are lower in Malaysia and Singapore.

OPERATING MODEL

DragonCare Canada should source products from its manufacturing facilities in Singapore and Malaysia, and use Canadian pharma-products distributors to reach the pharma-retailers and ultimately the end users.

MARKET SIZE ANALYSIS & MARKETING PLAN

Product

DragonCare should enter the Canadian market with only the TCM product line since DragonCare can differentiate itself best on the basis of its research and scientific capabilities (which are more applicable to this line of patentable products) and because there are more opportunities for market penetration in this segment due to less competition. DragonCare should introduce two patented women’s healthcare products for nutritional benefits & immunity development (55% of consumers use NHPs for this reason) . The primary reason for this recommendation is that women form the biggest TCM market segment (Women’s Herbal Medicine Market Size: $ 535 million. Growth Rate: 20%).This limited introduction approach will allow DragonCare to strategically allocate its limited resources in building the brand effectively. Exhibit 13 & 14 show market size calculations and projected growths.

Price

We suggest that DragonCare adopt a premium pricing strategy (inline with its brand image) and price its products at $32-$35/bottle (Retail price in Canadian $).Competitor’s products are in the price range of $21-$35/bottle .

Promotion

DragonCare will use a multi-pronged approach for establishing its brand. It will have a budget of $2.5 million for promotions in 2006.Advertising in health books and buzz marketing techniques will be the main promotion vehicles. (Market research indicates health books (18%) and family/friend referrals (36%) as being top influencers in buying decision for NHPs) .

Advertising: Using health magazines for women, cable TV, radio, newspaper, bill boards, and internet. The focus of the advertisements will be product benefits, DragonCare’s research labs and Singapore - a clean & progressive city. This approach will help build consumer confidence on the quality of health products imported to Canada.

Sales Promotions: Includes free samples, discount coupons, bundling products into value packs, and bundling DragonCare goods (key chains, coffee mugs etc).

In-Store Promotions: Includes Trade Discounts and special In-Store campaigns.

Public Relationships: Includes participation in Trade Shows, sponsorship of social causes targeted at women.

Direct Mail Campaigns: These campaigns will be used for selectively reaching potential long term customers.

Blogs: DragonCare will also initiate/participate in discussions on herbal products in blog sites like www.blogscanada.com where its customers can share their experiences on the efficacy of DragonCare’s products. This channel, we believe, will prove to be effective for buzz marketing.

Distribution

There are three main distribution channels for Dragon care in Canada: health food stores, pharmacies and TCM practitioners. DragonCare will reach the health food stores and pharmacies through strategic alliances with two pharma-product distributors (one each in BC and Alberta). Online sales are not recommended based on ROI calculations.

FINANCIAL ANALYSIS

(Note: All figures are in �000s SGD)

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